CHESAPEAKE
Two days ago, SPSA was poised to adopt the highest trash -disposal fees in the nation. The troubled regional waste authority had no choice, its leaders said, lest it risk going broke.
But suddenly Wednesday, a new plan surfaced.
By the end of the day, SPSA officials said, they hope to keep the rates close to what they are now, at $104 per ton of household trash, instead of skyrocketing to $245 per ton, as had been expected just 48 hours earlier.
Under the last-minute plan, the Southeastern Public Service Authority would restructure some of its debts, promising to pay them off later, in order keep about $30 million in hand. The money could pay bills, keep trucks rolling and allow the 30-year-old agency to stay afloat during its ongoing fiscal crisis.
SPSA, which serves eight cities and counties in South Hampton Roads, owes $240 million and faces a $16 million budget shortfall this year.
The emergence of the bailout plan stunned some local leaders, who said they did not know of its existence until they walked into an SPSA board of directors meeting Wednesday morning.
"I would lose my job running an agency like that," said William Harrell, the city manager of Chesapeake.
Harrell said he has struggled for weeks looking for ways to shoulder the anticipated rate hike, which would cost Chesapeake $7 million extra for trash disposal this year. He worried he would be forced to cut city services and lay off employees.
Harrell and Chesapeake Councilman Bryan Collins were especially angry that, given the high stakes, they did not even have a copy of the plan in front of them Wednesday, as a bond counselor from New York described the concept to them with hard-to-read graphs and slides.
"I'm really outraged," Harrell told the board after the presentation. "There's no notification, nothing for us or the public to even look at."
SPSA's public information director, Tom Kreidel, said he did not know about the plan, either, and had no copies to distribute to the board, the media and a roomful of residents and business executives until later in the morning.
Bucky Taylor, SPSA's executive director, apologized for the lapse. But he said the agency had been working internally on such a solution since November. Only now was it ready for a public airing, he said.
Harrell then asked why Taylor and other SPSA officials, knowing this option might be available, continued to press for a $245-per-ton tipping fee - even telling the city manager himself last week that failure to act on the rate hike could doom the agency.
Michael Barrett, who represents Virginia Beach on the SPSA board, came to Taylor's defense, praising him for seeking alternatives to the rate hike.
After the tense dialogue, the board retreated into executive session, meeting behind closed doors to discuss this and other issues for more than two hours.
Afterward, SPSA board Chairman Don Williams, a Norfolk city councilman, said the agency would pursue two courses of action:
It would try to work out the debt-restructuring plan and, in the meantime, would use about $7.5 million from a line of credit with Wachovia Bank to cover day-to-day expenses.
The eight-member board voted 6-2 to pursue the restructuring plan, with Chesapeake and Portsmouth saying no, and 8-0 for the line of credit.
The board also set a new date, April 8, for a public hearing on new disposal rates for 2009.
Turns out the board could not have legally enacted the $245-per-ton rate anyway on Wednesday, given that SPSA had not given 60 days' advance notice of the hearing and vote, as required by open-government law.
Williams said that if the financing plan succeeds in the weeks ahead, he expects the proposed fees would be "about half" of the $245 rate. If the plan proves too difficult or unpopular, "we'll go back to Plan B," meaning the $245-per-ton option.
Scott Harper, (757) 446-2340, scott.harper@pilotonline.com
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Reorganization
Mr. Barrett, I commend you for taking the time and putting forth the extra effort to inform readers of the Pilot. I for one would be interested in hearing about your ideas for reorganization. I think others would be interested as well. There is certainly a lot at stake with the possible failure of a eight member owned asset such as SPSA. Do you think there maybe a solution for everyone (private and municipal) sharing in one reasonable tip fee. Do you see flow control or an waste generator fee as possible solutions.
Excellent Questions
You are referring to two separate matters. The 16M shortfoll is the amount that the budget for this fiscal year is out of balance. Therefore, the board needs to cut costs/raise income in some combination that totals $16M in order to end this fiscal year balanced. In future years, one way to reduce debt service portion of the budget is to reschedule some of those payments for later years when the projected debt payments are smaller, so the proposal to refinance debt is to move $30 M of the debt payments to later years, thereby allowing the municipal tip fees to be lowered. Problem is, we still need to incur debt to expand the landfill for the years 2012-2016, and we have other capital requirements to run this industrial operation safely and efficiently. So frankly, these emergency stop gap measures are only proposed to prevent fiscal collapse brought on by the members refusal to meet their financial obligations.
SPSA
If the short fall is 16 million, why are they trying to restructure 30 million? Has management or the board done anything that would lead anyone to believe they will keep the extra 14 million in reserve? Repairs are being made at the power plant on a scale that has not been seen in years. That's not to say they aren't needed but why spend tax-payer money to improve conditions if the sale is a done deal?
Solution?
I bring up Chesapeake because they sued SPSA to try to get out of their contractural obligations and to shift those costs to the other members. And in this case, their objection to the public notice provisions required the cancellation of the public hearing on the tip fees, and therefore the emergency use of an existing line of credit for working capital instead of for enhancements to the waste to energy plant. Further, the proposed refinancing to postpone debt payments requires each member to guarantee the debt payments, which is not required now, and the restructured debt will likely have a higher interest rate. Even if each member agreed to this, which is unlikely, it is simply a continuation of the discredited tactic of postponing debt in order to have a lower tip fee. In fact, I do have a plan for reorganization, but it requires partners to own up to their responsibilities, not to duck them, so I am sure it will not receive much consideration.
MASKING THE ISSUE
Mr Barrett- Why do you continually bring Chesapeake into the conversation when the REAL issue should be problem solving?
Apparently, you think rhetoric is enough and that bluster will bully people into thinking your way.
Please address why you won't pledge to be a problem solver-no matter how hard the decision. Please tell everyone who reads these posts why you were so critical of the General Assembly members for not solving the transportation problem while you do exactly the same thing-talk and talk and talk-and then ask others for money.
Put up or...well, you know the rest of that quote.
SPSA BE GONE
and take the incompetent mangement with you. Enough is Enough!!
The Truth Hurts
Well, I guess the truth hurts. Perhaps if you step back and acknowledge that refinancing does not mean paying off, you would agree with me. Fact is, none of the original framers, Chesapeake included, could have forseen the inintended consequences of free disposal for Suffolk, a capped rate for Virginia Beach, nor the Supreme Court decision which freed the commercial sector to seek the lowest possible rate. But despite the lawsuit by Chesapeake which it lost and the legislative coup attempt by Delegate Cosgrove, the fact is, Chesapeake agreed to pay the tip fee necessary to fund operations and debt. Now it is trying to get out of its contract without any quid pro quo. It has chosen power over negotiation. Perhaps they will prevail, but the rest of the story has yet to be written.
MR BARRETT, YOU LOSE CREDIBILITY
with every post. How long have you been a SPSA Board Member? You have a lot to say about what's wrong, you make an awful lot of accusations and yet you have offered no solution.
I think the PEOPLE want a solution not more and more silly rebukes from you. I think the PEOPLE want to have SPSA be a group they can have some confidence in to manage their affairs. You have been a part of the problem-please put your considerable skills to work for a solution.
There is a lot of irony in this sad situation. You can continue to be the person who wants to sound smart and walk away or you can step up to the plate and be a leader in a solution. Most people don't care about where we came from-they want to know where we are going and how we are going to get there without financial failure.
You are a leading spokesman of taxing others to death as long as you don't pay. You berate the General Assembly members for shirking their responsibility to solve problems and make the hard decisions-but you, as a SPSA board member, will not practice what you preach. That's the real irony.
If you feel you cannot be a part of a fair and reasonable solution, do everyone a favor and resign your position.
Well actually Emily, perhaps
Well actually Emily, perhaps you missed the irony of refinancing debt in order to avoid payments that are due now. Is not this one of the short sighted tactics that got SPSA into the financial mess it is is today? So let me get this straight. You want to continue the same tactics and you expect it will result in a different outcome? In regard to your challenge to the Beach's right to vote, perhaps you are not aware of our position for the last decade that SPSA's borrowing strategy was unsustainable and would result in fiscal disaster if not remedied. I note that during that same time period, Chesapeake simply went along with the crowd and voted for more borrowing in order to keep fees as low as possible. Now that the results of this decidely bad policy have produced the predicted results, you want other cities to pay more to relieve them of their contract? Is that what you mean?
LET SPSA FAIL
Let's hope SPSA fails outright. Let's say goodbye, once and for all of the incompetence that has run this organization into the ground. SPSA, hit the road!!!!!!!!!!!!!!!!!!11
LET'S TALK ABOUT OUTRAGEOUS BEHAVIOR
From the newspaper accounts:
Chesapeake rightfully objects to an off budget $7 million dollar bill (Feb 1 to June 30) for SPSA.
SPSA ignored the Virginia laws for advertising the public hearing and vote. SPSA gave 14 days notice instead of the required 60 days.
SPSA presented a debt restructuring plan that had been discussed since November but board members had not been informed of this information, it wasn't on the agenda. They didn't even have a copy of the information to read.
The restructuring plan might work-which would be great. However, Mr. Barrett announced he probably couldn't support it as VB's representative. Without his vote the restructure won't be able to be done.
Now-tell me whose outrageous behavior may bankrupt not only SPSA but several localities who don't have a sweet deal?
Mr. Barrett, you can be part of the solution. Virginia Beach can come to the table and help pay the debt YOU voted to obligate the other cities to pay. You can also help by recognizing people are much smarter than you think.
Yesterday's Display by The BOD tells alot about the region
When the appointed members of the SPSA board of directors have to resort to name calling you can understand the publics outcry for their dismissal. The problem however runs deeper then just the SPSA board of directors. The city governments of the Hampton Roads area have always acted this way when it comes to cooperation needed to get things done across city/county borders. The "protect my rice bowl" mentality doesn't serve the citizens of the area.
Outrageous behavior
Yes, the meeting was a classic example of short term crisis reaction trumping long term strategic requirements. When Chesapeake objected to the vote on the new tip fees before the meeting, and then in the meeting they and other members expressed outrage at the executive director's attempts to work out a reduction made necessary by the lack of a vote of the tip fees, he and Chairman got jumped on and insulted for their diligence. For me, this represents the nail in the coffin. Despite the value we have created in the system, it is no longer viable to operate and govern this system as mandated by the Act. While I understand the use of existing financing for cash flow, in the end, it is simply a final act of desperation. The restructuring of debt just puts it off for a longer period of time; it doesn't go away. Does this remind anyone of why SPSA is in the fiscal crisis it is in today? And of course, on April 8th, the tip fees for six members, representing only 20% of the waste flow will still need to be increased by 100% while the other 80% stay exactly the same. Again, the waste disposal system works fine; it is the cost allocation system that is broken. And regretfully, tha
You got em
You got Bucky Taylor at the head of this organization and all of us Franklin are glad to get rid of him as the City Manager. SPSA troubles will only continue.........
FAILING THE SNIFF TEST
SPSA- DEWEY, CHEATUM & HOWE.
GET RID OF MANAGEMENT
I would get rid of the management from top to bottom. In two years, we will be going through the same nonsense. Nothing will change, even if they do restructure their debt, you still will have incompetence at the helm. Let's hope restructuring debt does not work, so we can be rid of the continuation of failed leadership.
Member Cities are in this up to their EYEBALLS
Again the members of the Board of Directors are: Chairman Donald Williams City Councilman Norfolk, Vice-Chairman Ray A. Smith Portsmouth, Michael Barrett CEO, Runnymede Corp. Virginia Beach, Leroy Bennett City Councilman Suffolk, James Brown Board of Supervisors Member Isle of Wight County, Bryan L. Collins City Councilman Chesapeake, Dallas O. Jones Chairman, Board of Supervisors Southampton County, Barry W. Cheatham Sherman, Spero and Sarafino,Ltd. Franklin, Alternates: Douglas Caskey County Administrator Isle of Wight, Bill DeSteph City Councilman
Virginia Beach, Michael W. Johnson County Administrator Southampton County, Selena Cuffee-Glen City Manager Suffolk, Kenneth Chandler, City Manager Portsmouth, William E. Harrell City Manager Chesapeake, Stanley A. Stein Assistant City Manager Norfolk, June Fleming City Manager Franklin. Don't let this Morons fool you they are as deep in this CRAP FIELD as day to day management. The citizens of these communities will continue to have these problems until you elected people that are not corrupt, dumb, stupid or all three.
Incompetents!
This is one more example that SPSA is run by incompetents. The member cities should let them go broke, force them into bankruptcy and void the existing contracts. Then explore other options with independent contractors.